Novartis Will Pay $678 Million Over Healthcare Fraud, Whistleblower Award Could Surpass $70 Million

Switzerland-headquartered Novartis recently agreed to pay $678 million to resolve allegations that it violated the federal False Claims Act and the Anti-Kickback Statute in its marketing of several cardiovascular and diabetes drugs, including Lotrel, Valturna, Tekturna, Diovan, and Exforge. As part of the settlement, Novartis made several admissions of guilt. 

The whistleblower lawsuit that exposed the alleged misconduct was filed in January 2011 under the False Claims Act. The complaint offered details about alleged kickbacks paid to physicians to boost sales of Novartis drugs. The illegal incentives allegedly included fancy dinners, pricey sporting event tickets, strip club expenses, and catering services for the doctors' family events.

Besides the United States, the plaintiff alleged that the defendant defrauded the states of New York, California, Florida, Texas, Washington, Colorado, Montana, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Louisiana, Tennessee, Virginia, Wisconsin, Maryland, Michigan, New Hampshire, New Jersey, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, Massachusetts, Rhode Island, the District of Columbia, the City of New York, and the City of Chicago. 

The federal Anti-kickback Statute prohibits remuneration to physicians for patient referrals that will eventually trigger Medicare and Medicaid reimbursements. Kickbacks can negatively impact the quality of medical care because they incentivize doctors to put profits first, rather than focusing on what is best for their patients. Likewise, inappropriate financial arrangements between doctors and pharmaceutical companies often result in the government overpaying for prescription drugs.

The Novartis whistleblower alleged that through a set of sham speaker programs the company offered doctors lavish dinners at upscale restaurants in cities like San Francisco, Miami, and New York. While the events were purportedly organized to share information about Novartis drugs, they were generally focused on food, drink, and entertainment. The lawsuit cites the case of a single doctor who earned more than $320,000 in Novartis speaking fees, while he wrote over 8,000 prescriptions for the company's drugs.   

The whistleblower, Oswald Bilotta, was once a Novartis sales representative in Long Island, New York. In an NBC News article titled, "It was his dream job. He never thought he'd be bribing doctors and wearing a wire for the feds," the Novartis insider told the intricate story of his discovery of the alleged misconduct by his former employer. 

Bilotta started working for Novartis in 1999. Little did he know then that he would one day play a key role in securing the largest settlement in a fraud case involving kickbacks. When NBC reporters asked why he did it, Bilotta replied, "I felt like you needed to take drastic action to turn this system upside down and make it more legit. The whole system needed to be blown up and pieced together in a fair way—fair for taxpayers and good for patients." 

For his enduring efforts to shed light on healthcare fraud, he will likely receive a whistleblower award amounting to tens of millions of dollars. A spokesperson for Bilotta has estimated the reward will surpass $70 million.

Following the approval of the settlement, the acting U.S. attorney for southern New York, Audrey Strauss, said in a statement, "For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis's drugs."

In the settlement agreement, Novartis agreed to "strict limitations on any future speaker programs, including reductions to the amount it may spend on such programs," prosecutors said. 

Looking back on his decision to blow the whistle, Bilotta told NBC News, "It is not an easy road—it's very psychologically taxing. You have to be very sincere in what you're doing and be prepared to be opened up to a tremendous amount of scrutiny. Go with your convictions, but if you're doing it for financial gain, it's a mistake."  

Industry insiders who have information about illegal kickbacks can help make the U.S. healthcare and pharmaceutical industries more transparent. The False Claims Act (“FCA”) enables whistleblowers to file a lawsuit on behalf of U.S. taxpayers. Because blowing the whistle can be "psychologically taxing," as Bilotta put it, as well as financially strenuous, the FCA provides that tipsters are eligible for awards ranging between 15 and 30 percent of the total recoveries.

If you have information about illegal kickbacks, you can file a False Claims Act (FCA) lawsuit with the help of a whistleblower attorney. Under the FCA, tipsters can receive up to 30 percent of any recoveries resulting from the evidence and information they provide. Connect with our experienced attorneys at Halperin Bikel online or call us at 929.290.1266.


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

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